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USDINR – Weekly Outlook & Analysis for 5th Feb 2022

USDINR Forecast & Technical Analysis for Forex

Introduction

The Indian government announced plans to borrow more in 2022 and 2023 in its budget and its plans to increase spending as a means to revive the economy that has been hit by the coronavirus pandemic. 

The OlympTrade platform analysts saw a selloff in India’s benchmark bond after the announcement. Some analyst thinks that the program will be tasked for the market in a year from now when the RBI wants to curtail excess liquidity by increasing interest rates.

Forex platform, online broker, Indian rupee

India’s Fundamentals

The Finance Minister of India announced that the fiscal deficit for the year 2022 is expected at 6.9% a bit higher than the previous target of 6.8%. The government plans to increase its borrowing during the year, with a target of about 14.94 trillion Indian rupees ($199.80) billion to support the annual budget of about 39.40 trillion Indian rupees for investments in the areas of affordable housing and highways. 

The borrowing is also a plan to increase the spending culture that was hit by the pandemic which affected the economic activity of the financial and stock market. The government is setting aside some funds of about $40 billion for fertilizer subsidy and food as part of the 2022/23 plan. The Reserve Bank of India plans to stabilize the prices of commodities while keeping the growth objective at hand.

US Fundamentals

USD Jobless Rate

The jobless rate for the US government is important for overall the health of the economy as the information is used by those steering the monetary policy of the country. Unemployment factors in the spending capacity of consumers because it correlates with labor conditions.

The Bureau of Labor Statistics measures the percentage changes of the total workforce that are actively seeking a job during the previous month compared to the forecast.

The forecast is 3.9% while the previous data was 3.9%.

USDINR Price Analysis

Monthly Chart Projection: Trades within correction area

USDINR monthly chart - Feb 4 2022

 

Monthly Resistance Levels: 76.00, 77.416, 75.00

Monthly Support Levels: 72.98, 73.83

As of 01 December 2021, the Indian rupee gained about 3.50% in that month by taking the price down. If the chat pattern on the monthly time frame is confirmed to be a double top, we may see the online brokers opening short positions to take the price of the pair lower.

However, there is another twist on the chart, when you connect the trend lines from the highs and lows you will notice that it has formed a symmetric triangle on the forex platform, therefore the breakout of the price can be to the upside in favor of the long position traders or the breakout may favor the shot position traders.

Weekly Chart

USDINR weekly chart - Feb 4 2022

 

Weekly Resistance Levels: 75.70, 76.53

 

Weekly Support Levels: 73.75, 72.80

 

India’s budget is to spur spending which will support economic growth. The government will be spending on infrastructure, social programs, and health services as indicated in the budget. The government is planning to set the Indian economy on a firm foot as the government moves to fight the spread of COVID-19 and its variants amid the rising inflationary pressure.

 The weekly chart indicates that price is in a channel, as you can see that whenever the price touches the lower trend line price bounces off from the zone, and also when it touches the upper channel the price is rejected. 

 A definite direction is not confirmed yet as the pair has not broken out of the channel. The Indian rupee may lose some gains to the US dollar as the price may go to retest the resistance line of the channel.

Daily Projections: Breakout of Descending Triangle

Daily Resistance Levels:  76.44, 75.33

Daily Support Levels: 72.98, 73.76.

The bullish run of 12th January 2022 took the pair up by 2.09% against the India rupee, the current bullish surge is on a correction phase, if the Bulls momentum can pick again, we may see more online brokers opening long position to ride the trend to the resistance zone of 76.44.

However, if the Bears can overturn the table against the Bulls by closing below the 73.76 zones, the India rupee will dominate the forex market and the price can move to the next support level of 72.98. 

Bullish Scenario:

The forex platform daily chart shows that some online brokers are biased for an uptrend and they will be expecting a stronger push to breakout above the resistance zone 75.30 for the price rise higher.

Bearish Scenario:

The Bears must take out the support level of 74.47 on the daily chart if the Indian rupee must gain against the US dollar and the trend is will continue in its bearish direction. If the price can close below the psychological zone of 73.76, we expect the downtrend to continue. 

USDINR Conclusion and Projection

The USDINR pair is on a bullish rally because of the Bulls surge from the psychological zone and the online brokers who are long will follow progress before we see another change in the direction of the pair.

 



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